Broadcom shares fell on Thursday after the company issued a fourth-quarter revenue forecast that came in slightly below Wall Street expectations.
The weaker guidance raised concerns about whether growing competition in custom artificial intelligence chips could slow Broadcom’s future expansion.
Broadcom Q4 Revenue Guidance Misses Estimates
Broadcom expects fourth-quarter revenue of approximately $34.8 billion.
That figure is slightly below the Wall Street consensus estimate of $35.05 billion.
However, the company still expects strong demand from artificial intelligence. Broadcom forecast fourth-quarter AI chip revenue of around $21.7 billion, above analyst expectations of $21.33 billion.
The contrast highlights continued strength in Broadcom’s AI business despite a softer overall revenue outlook.
Broadcom Stock Falls After Guidance Miss
Broadcom shares fell 5.7% in early US trading following the announcement.
Investors appeared to focus on the weaker-than-expected revenue forecast, even as the company presented an aggressive long-term growth outlook.
The reaction suggests that expectations remain extremely high for companies exposed to the artificial intelligence boom.
Broadcom Sees Revenue Doubling in 2027 and 2028
CEO Hock Tan provided a more optimistic longer-term outlook during Broadcom’s earnings call.
Tan projected that company revenue could reach approximately $115 billion in fiscal 2027.
He also said revenue could potentially double again to around $230 billion in fiscal 2028.
The forecast helped ease some concerns that Broadcom’s AI-driven growth could peak in the near term.
Analysts Focus on Broadcom’s Long-Term Growth Outlook
Barclays analysts noted that Broadcom’s decision to provide a longer-term revenue outlook could reduce fears of an approaching growth peak.
However, they also highlighted a potential challenge.
Once investors receive aggressive long-term forecasts, they may expect companies to continuously raise those projections. Broadcom indicated that its 2028 outlook would not be updated every quarter.
That could reduce pressure on management to constantly revise its long-term forecasts.
Competition in Custom AI Chips Is Increasing
Broadcom’s custom-chip business is facing stronger competition as major technology companies look for alternatives to Nvidia’s dominant AI processors.
Marvell recently announced a custom-chip agreement with Google that could generate as much as $120 billion in revenue through fiscal 2033.
The agreement could also make Google one of Marvell’s largest investors, with a potential stake worth up to $12.2 billion.
Deals like this show how aggressively technology companies are expanding their supplier networks for custom AI chips.
Broadcom Expands Manufacturing Capacity
Broadcom has also been working to increase manufacturing capacity and reduce its dependence on individual suppliers.
The rapid growth of artificial intelligence has placed significant pressure on the semiconductor supply chain.
As part of its strategy, Broadcom signed a multi-year memorandum of understanding with Samsung Electronics in July.
The agreement is aimed at supporting production capacity as demand for advanced AI infrastructure continues to rise.
AI Chip Revenue More Than Triples
Broadcom’s third-quarter results still showed significant strength.
AI chip sales more than tripled to $16.7 billion, helping total revenue reach $29.59 billion.
That result exceeded the Wall Street consensus estimate of $29.25 billion.
Adjusted earnings also came in above expectations at $3.32 per share, compared with analyst estimates of $3.21 per share.
Investors Question Whether Growth Can Continue
The latest earnings results highlight the strength of Broadcom’s artificial intelligence business.
However, the weaker fourth-quarter revenue outlook suggests that investors are becoming increasingly focused on whether the company can maintain its rapid growth.
Large technology companies are diversifying their custom-chip suppliers, increasing competition across the semiconductor industry.
Broadcom stock has gained around 6% so far this year, but it has underperformed several major semiconductor peers and the broader chip sector.
For investors, the key question now is whether Broadcom’s long-term AI growth projections can offset concerns about intensifying competition and softer near-term guidance.
